MOSCOW, RUSSIA – A global wheat market that has seen soaring prices in recent weeks due to supply issues learned on Nov. 10 that Russia, the world’s leading wheat exporter, is considering revising its export taxes upward on the grain commodity, Reuters reported.

The report said that Dmitry Patrushev, Russia’s agriculture minister, stated in a recent government meeting that the change would occur in case of major price growth in the global market.

Food inflation in Russia is at a five-year high and the country already has a formula-based tax on grain exports which was implemented in June.

“In the event of a significant increase of the global prices, let’s say up to $400 per tonne or more, the formula for calculating the floating export duty will be revised upwards,” Reuters reported Patrushev as saying.

He added that Russia also plans to guarantee an adequate domestic supply by setting a quota on grain exports, including wheat, for the first half of 2022.

Eduard Zernin, head of the Russian Union of Grain Exporters, told Reuters he expects the quota to be set by Feb. 15 and to last through June.

The Russian government on Oct. 28 cut its official grain harvest estimate for the 2021-22 marketing year to 123 million tonnes, down from its previous projection of 127 million tonnes. It said the country’s wheat output, which has been hampered by dry weather, is expected to shrink to 75 million tonnes, down from 85 million a year ago.

The Foreign Agricultural Service of the US Department of Agriculture (USDA) projects an even smaller 2021-22 Russian wheat crop at 72.5 million tonnes. The USDA also expects wheat exports to decline to 35 million tonnes from 38.5 million.

The USDA sees the European Union replacing Russia this year as the leading wheat exporter at 35.5 million tonnes.

Steve Freed, vice president, ADM Investor Services, Chicago, Illinois, US recently told Milling & Baking News, a sister publication of World Grain, he anticipates downward pressure on Russian wheat exports in the near term.

“It looks like the Russian domestic price of wheat is higher than the export price, so we’re going to see a pretty steep decline in Russia’s export wheat availability,” Freed said.